The ABI has slammed the Department of Transport (DfT) after the minister for transport, Stephen Lady-man, conceded that its policy on newly qualified drivers is failing.
Speaking at the transport select committee, Ladyman admitted that the DfT has no record of how many un-insured drivers are on the road.
He said that many novice drivers who had their licences revoked, after being given six points within the first two years of driving, had failed to return to the test.
He admitted: "If these people are not returning to take the test, I think it would be a difficult stretch of the imagination to assume that they have stopped driving."
An ABI spokesman said the confession was "disturbing". The spokesman said: "It shows that we need to take radical action to make it easier for young drivers to get insurance.
"We need to ensure that young drivers are taking a longer period to learn."
Biba's technical services manager Graeme Trudgill called on the DfT to intro-duce more stringent quest-ions about insurance in the driving test.
"Professor Greenway said that young drivers need to be educated," Trudgill said.
"We would like to see that reflected in the driving test."
The ABI supported the call.
MPs are now demanding that the government forces drivers to display a valid insurance disc in the windscreen.
Liberal Democrat transport spokesman Paul Rowen said: "Drivers should be forced to display discs.
"It would mean changing the way insurance certificates are handed out, but it can be done.
"Saying cameras detect uninsured drivers is a cop out. The government is not doing enough."
But Home Office minister Vernon Coaker rejected the suggestion. He said: "The presence of a disc on a vehicle's windscreen would not prove that the person driving it at any particular time was properly insured to do so."